Ecosystem Conflict Heats up in Mobile Payments Business with Apple Pay Launch

One of the persistent issues for mobile payments is the complex nature of the ecosystem needed to support it, ranging from end user smartphones and willingness to use mobile payment apps; retailer and credit or debit card provider support; as well as participation by clearing networks.

With the launch of Apple Pay, we have seen a rather significant degree of retailer conflict with credit card issuers, each backing a different service.

A group of retailers (Merchant Customer Exchange) are creating their own mobile payment system, CurrentC, set to launch in 2015.

Now there are reports MCX members are disabling the near field communications function of their retail checkout systems, to prevent use of Apple Pay, now viewed as a rival system.

The big battle, though, is not between Apple and the retailer consortium, but between the retailers and the credit card and debit card issuers (banks).

Banks and credit card companies have enthusiastically supported Apple Pay, seeing it as a way to increase the number of purchases people make with their credit cards.

You can see the problem: the mobile market, already fragmented, is going to get more fragmented. Softcard, the AT&T, Verizon, T-Mobile US consortium and Google Pay already are in the market.

And one cannot help but think Amazon and PayPal could be key contenders as well.

Those tensions within the mobile payments ecosystem have analogies in the video entertainment and mobile communications businesses as well.

Tensions between video distributors (cable TV, satellite TV and telco TV) are not unusual, especially when contract renewals are underway.

In the mobile communications business, device suppliers such as Apple have different business interests than the service providers, while app providers have different business interests from mobile service providers and device suppliers.

That has mobile service providers and many fixed network service providers lining up against network neutrality rules, while many app providers support those rules.

Though all the arguments advanced by all the contestants claim “consumer benefit,” there is substantial business advantage at stake.

That is not to say those arguments are without merit. But there always are private interests that correspond with every public purpose.

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Gary Kim has been a communications industry analyst, consultant and journalist for more than 35 years. He currently works mostly as a content developer (marketing copy, white papers, applied research, conference and blog content.

He speaks frequently at industry events, has written one book, half a dozen major market studies and 24,000 articles. His work is noted for its examination of business model issues.

He was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.